Checks and Balances: Top Challenges of Accounts Payable
Accounts payable (AP) is changing. In a cloud-driven, mobile-first world, paper processes lack both the agility and accuracy required to keep things moving. Making the shift isn’t always easy. As noted by PYMNTS.com, while just 15 percent of companies prefer physical checks over electronic alternatives, 80 percent still use paper payment methods.
The disconnect? Many organizations equate it to familiar processes with familiar outcomes. Combined with the knowledge that AP processes are fundamentally complex, organizations are also bound to be concerned about the difficulty and frustration of changing what they know works. Positive change is possible — and necessary. Let’s take a look at three common practices that streamline AP processes without causing disarray.
There’s a growing divide in AP document management, driven by the rapid increase of document volumes and the variety of document types processed by AP staff. To ensure invoices are accurately reviewed, entered, and completed, more than half of organizations use more than two approvers. While this decreases error rates, it also significantly reduces the speed of payables data processing. Add in disparate document formats and it becomes a full-time job just to manage information influx, let alone get invoices paid.
Meeting this challenge starts with taking repetitive processes off the plate of AP approvers with integrated automation tools capable of scanning multiple document types, identifying key information, and converting necessary data into standardized formats.
Almost 60 percent of companies still enter invoice data manually. Beyond the glacial pace of entry compared to device-assisted data capture, manual processes introduce a fundamental flaw: human error. While improved training and data capture automation can help reduce the accidental errors that come with human entry, there’s no way to completely eliminate this risk.
And this is under ideal conditions — if organizations are understaffed and AP staff are under stress, their error rates increase significantly. The result? At best, small errors that take time and effort to correct. At worst? Duplicate invoices that significantly impact your bottom line. As noted by CFO Daily News, duplicate invoices could cost small businesses more than $12,000 per month.
Avoiding the problem of duplicate checks and finding balance on balance sheets means identifying a collective home for all AP data: your financial document processing application. Software development kits (SDKs) can help bridge the gap between manual errors and digital entry, all while keeping data fully under your control.
AP isn’t a single process but an amalgam of multiple, discrete practices that must work in unison to ensure organizations account for existing liabilities, comply with all relevant privacy and data-handling legislation and reduce the risk of lost or missing invoices. But this piecemeal processing nature creates its own problem, transparency.
With so many processes operating simultaneously, companies lack the ability to single out specific causes of AP problems. Instead, they’re stuck dealing with the symptoms of late, under, or overpaid invoices, even as staff chase paper trails created by multiple approvers to ensure invoice information is accurate and complete.
Tackling the root cause of accounts payable challenges means adopting a transparent-by-nature approach that leverages the single source of your existing application framework to inform all AP action and provide auditable, digital trails of ownership.
Don’t check out of complex accounts payable processes. Find the balance and boost your AP ability with integrated, adaptable solutions. Ready to dig deeper and defeat the pain points that are holding your AP back? Start with volume two of our AP eGuide series: “Earning Straight A’s.”